Nissan CEO Uchida promises cuts with 'no taboos'

YOKOHAMA, Japan -- Nissan CEO Makoto Uchida, under fire from shareholders angry about the automaker's slow-paced revival, said his team is creating a new restructuring plan "fast" and that the company will cut deeply in the critical North American market with "no taboos whatsoever."
 
Uchida reiterated that the new blueprint will be announced in May, in order to give Nissan time to coordinate the next steps with alliance partners Renault and Mitsubishi Motors.
 
But at an extraordinary shareholders' meeting here on Tuesday south of Tokyo, some attendees voiced exasperation that the plan was not coming together earlier and already delivering results.
 
"That's a little too late, isn't it?" one shareholder complained about the May timeline.
 
Uchida pleaded for patience saying his team was focused on lasting results. Already, he noted, Nissan is reining in costs amid falling sales. The actions include a round of voluntary buyouts across Nissan's U.S. operations, but Uchida hinted more drastic cuts are on the way.
 
"The plan is underway today, fast," Uchida said. "The direction we are following is not wrong... We are going to reduce our expenses in North America with no taboos whatsoever."
 
Uchida's comments came as the company's investors gathered at the meeting to appoint him and other new nominees to the automaker's board.
 
Uchida's appeal came a week after Nissan reported its first quarterly net loss since 2009 and slashed its full fiscal-year earnings outlook on slumping sales and withering margins.
 
It was Uchida's first hosting of a shareholder gathering since the arrest and indictment of former Chairman Carlos Ghosn on charges of financial misconduct in November 2018.
 
Ghosn's arrest threw Japan's No. 2 automaker into turmoil -- forcing it to focus more on corporate governance and less on making and selling cars. Uchida is still dealing with the fallout.
 
Indeed, Ghosn's alleged misconduct and his escape from Japan to his ancestral homeland of Lebanon at the end of December was another hot topic at the shareholders' meeting.
 
One shareholder proposed that Nissan and its shareholders fund a 1.5 billion-yen ($13.8 million) bounty to wrest Ghosn from Lebanon, which has no extradition treaty with Japan, and make him face justice in Tokyo, where had been awaiting trial on four charges of wrongdoing.
 
"If that is spent in Lebanon, then we can bring Mr. Carlos Ghosn back to Japan," the shareholder said. "Even if you were victorious in the civil suit, that doesn't mean anything."
 
Uchida did not respond to the suggestion, which drew a round of applause from the audience.
 
Uchida took the helm on Dec. 1 following the resignation of former CEO Hiroto Saikawa amid a scandal over accepting improper payouts under a stock-linked executive incentive program.
 
Saikawa stepped down in September and Yasuhiro Yamauchi, then the company's chief operating officer, had filled in as acting CEO until Uchida took the helm.
 
Shareholders voted to elect Uchida and three other directors to the board.
 
Two of the vacancies were created by Saikawa and Yamauchi, both of whom resigned from the board following the special shareholders' meeting. Another opening was created Nov. 11, when former Renault CEO Thierry Bollore departed the board following his ouster at Renault.
 
Nissan also expanded the number of directors by adding one more member. That appointee, an outside director nominated by Renault, is Pierre Fleuriot, a financial expert from the banking sector who concurrently serves as the lead independent director at Renault.
 
Also appointed to the board were newly appointed COO Ashwani Gupta, who took office in December as Uchida's No. 2, and Hideyuki Sakamoto, Nissan's executive vice president for manufacturing and supply chain management. Sakamoto fills a slot original slated for Jun Seki.
 
Seki, who had been tapped to serve as vice-COO under Uchida, was the man in charge of leading Nissan's revival plan. But Seki abruptly quit the company in December to become president of Japanese electric-motor maker Nidec, spurring further tumult at Nissan management.
 
Last week, Nissan said it posted a 26.1 billion-yen ($239.3 million) net loss in the fiscal third quarter ended Dec. 31. It was the company's first quarterly net loss since April-June of 2009.
 
Nissan's latest stumble was triggered by a bigger-than-expected fall in sales. A 10 billion-yen ($91.7 million) restructuring charge, for job and production cuts, helped tip Nissan into the loss.
 
Global retail sales fell 11 percent in the three months to Dec. 31, with the biggest pain coming in North America. Deliveries there dropped 17 percent to 404,000 in the quarter.
 
Nissan cut its profit and sales forecasts for the current fiscal year ending March 31.
 
Nissan is being squeezed between rapidly falling sales and high fixed costs. As a result, the company booked a six-fold increase in negative cash flow for the three quarters to Dec. 31.
 
Last year, Nissan embarked on a global restructuring plan that slashes 12,500 jobs worldwide and suspends lines at some eight locations worldwide. The goal is to cut capacity to 6.6 million vehicles a year, from 7.2 million in the fiscal year ended March 31, 2018.
 
But Uchida said that more restructuring is needed. He said that Nissan will unveil the plan in May after consulting with alliance partners Renault and Mitsubishi. He said that may mean dropping certain products or regional businesses and leaning more on Nissan's partners.
 
"Declining sales had a significant negative impact," Uchida said. "We are doing the right thing, and it is critical to remain focused. Yet, it will take time for the U.S. business to recover."